Gamestop reignites meme stock frenzy with $7.6-bn surge
Video game retailer rose as much as 83% to $168 in New York trading
Gamestop soared in premaket trading on Thursday as retail investors revived the surge in Reddit-favorite stocks, putting it on pace to reap $7.6 billion in market value over two days.
The video-game retailer rose as much as 83 per cent to $168 in New York. Among other favorites of traders populating Reddit forums, AMC Entertainment advanced 12 per cent premarket after gaining 59 per cent in the first three days of the week, while Koss Corp. surged 78 per cent. Nokia Oyj, also a favorite of the meme crowd, climbed 7.7 per cent in Europe, and Blackberry added 5.3 per cent in early trading.
The surge was spurred by a final-hour rally on Wednesday that brought Gamestop its biggest advance since January 29, the day Robinhood Markets restricted trading in it and 49 other stocks at the height of the frenzy. An equally weighted Bloomberg basket of those rose more than 5 per cent, the most since late January. The activity inflated trading volumes in the meme stocks and caused an outage on Reddit’s Wallstreetbets forum, the hub of the January volatility.
Gamestop shares advanced 58 per cent to $144.97 as of 8:05 am in New York. Reddit’s hold on earlymorning trading was notable with more than 5.4 million Gamestop shares trading hands. The stock, movie-theater operator AMC, cannabis company Sundial Growers and apparel company Naked
Brand Group were among the five most active stocks before regular trading opened.
The sudden revival in leftfor-dead stocks recalled an episode last month that captured the attention of Wall Street, regulators and eventually Congress, as members of Reddit’s Wallstreetbets forum egged on retail hordes in an attempt to take on professional short sellers.
Various explanations circulated as to what spurred the rallies Wednesday. The Gamestop frenzy came after Bloomberg News reported late Tuesday that Chief Financial Officer Jim Bell was pushed out in a disagreement over strategy to make way for an executive more in line with the vision of activist investor and board member Ryan Cohen, the co-founder of online petfood retailer Chewy.com. His addition to the board in early January underpinned the first flurry of moves in the stock after capturing the attention of Wallstreetbets.
According to Neil Wilson, chief market analyst for Markets.com, the sudden surge in Gamestop late Wednesday might have been triggered by a tweet from Cohen, who posted a picture of a Mcdonald’s ice cream at 1:57 pm New York time, about two hours before the US cash equity close. “Does it signal Cohen will fix the firm the way Mcdonald’s finally fixed its ice cream machines?,” Wilson said. “Or could it be even more cryptic and related to a new website that tells you in whether your local Mcdonald’s has a functioning ice cream machine?” he said.